Nevertheless, market anxiety persisted as hopes for a swift resolution to the conflict were tempered by defiant messages from Tehran, which vowed to continue fighting.
Initial confidence was supported by Donald Trump's assertion that the war with Iran was "very complete" and could "end soon," even as hardliners in Iran aligned themselves with the new Supreme Leader, Mojtaba Khamenei, maintaining that their oil blockade would continue.
However, within hours, the Iranian military cooled market expectations, with statements from the Revolutionary Guard claiming they would be the ones to determine the end of the war. Amid this exchange of messages, Trump again toughened his tone, threatening to strike Iran "TWENTY TIMES HARDER."
As investors digested the exchange of threats, Brent crude futures fell by as much as 11%, hitting lows of $88.05 per barrel, before moderating the decline to 4.8%. Oil also suffered following new reports suggesting that Washington could ease sanctions on Russian energy.
Iran has blocked the passage of oil by closing the Strait of Hormuz, through which one-fifth of the world's supply flows. This closure has led investors to brace for a prolonged period of high energy costs, which could in turn fuel inflation and, consequently, central bank interest rates.
The military crisis has pushed the Spanish selective index away from the record highs of February, around 18,500 points, after dropping more than 1,400 units at Monday's close—a 7.8% decline—although Tuesday's advance, the largest since April 2025, mitigated part of that punishment.
"As we have been pointing out these days, geostrategic uncertainty produces volatility, and the falls generate investment opportunities at cheaper prices (especially in: defense, semiconductors, banks, utilities, or infrastructure)," Bankinter noted in comments released via its Telegram channel.
"We remain confident that in the medium term, the reasonable economic cycle and solid corporate results are what set the trend, and therefore the market's evolution, once the current uncertainty eases, should progressively improve," they added.
At 0802 GMT on Tuesday, the Spanish IBEX 35 index was up 419.50 points, or 2.48%, at 17,347.70 points, while the FTSE Eurofirst 300 index of major European stocks advanced 1.44%.
Regarding individual stocks, Repsol stood out with a 3% decline, in line with the drop in oil prices, despite the group raising its dividend payout targets.
Elsewhere in the banking sector, Santander rose 4.52%, BBVA gained 3.87%, Caixabank advanced 3.30%, Sabadell gained 3.34%, Bankinter appreciated 2.58%, and Unicaja Banco rose 3.26%.
Among large non-financial stocks, Telefónica gained 0.75%, Inditex advanced 1.93%, Iberdrola appreciated 1.33%, Cellnex gained 1.40%, and the oil company Repsol lost 3.24%.
(Reporting by Tomás Cobos; edited by Benjamín Mejías Valencia)
